Anoop Savio has hit it big, but he’s also suffered crushing blows. One swipe, and the 21-year-old UF finance master’s student could snag a few shares of AMC. Another swipe, and he’d sell some Dogecoin, a cryptocurrency token. In a few trades on the brokerage platform Robinhood, Savio could see the value of his portfolio plummet suddenly or watch his balance skyrocket.
Young investors like Savio can trade anytime, anywhere — and they’re doing it with unprecedented fervor.
Asset management reimagined
Online day trading took off in the late 1990s, with the widespread adoption of the Internet and a sharp rise in technology stocks. Investors no longer needed to call their broker to execute trades; they could do it themselves with a few clicks.
Twenty years later, a new dawn of day trading emerged during COVID-19 lockdowns. Stuck at home with little else to do and armed with government stimulus checks, retail investors downloaded trading apps and started investing aggressively.
Jay Ritter, a retired UF finance professor, attributed 2020’s speculation-as-entertainment boom to digital brokerage tools that make investing relatively seamless.
Aaron Goffstein, a 22-year-old UF finance senior, said he and his friends invest with Robinhood, a discount brokerage platform popular among young men. The platform offers a range of assets, including stocks and cryptocurrencies.
Robinhood removes the guesswork from investing with its daily roundup of trending stocks on the app’s home screen, Goffstein said. It also nudges users to make specific trades via push notifications.
But the app sometimes goes too far to court investors, Goffstein said, from its vibrant color scheme to its digital scratch-off cards and virtual confetti.
“The upside is just that people can access the financial markets,” Goffstein said. “The downside is that the gamification of it where people are just playing it all day [and] they could be losing a lot of money, blowing up their accounts.”
Robinhood’s primary user base frequently engages in speculation, an investment strategy predicated on traders’ hope that high-risk trades will bear fruit. According to an Investopedia estimate, about 95% of speculative traders lose money.
A slippery slope
Jagger Liguori, a 23-year-old UF sports management master's student, said he’s seen Robinhood investors tethered to the app, checking it hourly for market fluctuations.
Liguori, who downloaded Robinhood during its pandemic-era popularity, said he didn’t understand the hype and thinks some of its user engagement tools verge on gratuitous.
“All the bells and whistles, all the charts, all the different colors just made it borderline addictive to use,” Liguori said. “It kind of reminds me of marketplaces in video games.”
Robinhood’s business practices have drawn scrutiny from state and federal regulators. In 2020, the Securities and Exchange Commission, which oversees U.S. financial markets, alleged Robinhood misled and manipulated inexperienced users, resulting in catastrophic financial losses. The company denied the allegations and settled with the SEC for $65 million.
Other platforms, like the cryptocurrency exchange Coinbase, have faced regulatory entanglements. The SEC ruled Coinbase violated brokerage registration requirements, subjecting traders to fraud and depriving them of investment protections in June 2023.
Kirk Mowl, a 22-year-old UF business senior, cautiously experiments with Coinbase. Mowl primarily trades traditional equities like stocks and bonds but manages conservative crypto holdings in the Coinbase app. He warned that investors seeking reliable returns shouldn’t hold large amounts of the digital tokens.
“I feel like anything you put in there, you have to be willing to lose; it's like gambling,” he said.
Like Robinhood, Coinbase brands itself as a tool for democratizing finance by making it more accessible for traders with limited experience and capital to invest. Both offer commission-free trading and fractional shares, making trades more accessible.
For example, a Coinbase user can purchase 0.1% of the cryptocurrency Bitcoin for about $100 and invest as little as $2 in a single transaction.
Along with its brokerage tools, Coinbase offers interactive crash courses, quizzes and games on cryptocurrency fundamentals. As traders progress through the learning modules, they can collect small amounts of crypto from the app. UF finance associate professor Baolian Wang compared Coinbase’s incentive mechanisms to casino games.
“If you only have a small amount [of crypto], you may not even consider it as an investment,” he said. “It’s a kind of fun; it’s an entertainment that’s cheaper than going to Vegas.”
Coinbase estimates about 30% of Gen Z and millennial investors own crypto. Meanwhile, young and highly risk-tolerant traders have embraced other speculative activities, such as sports gambling. Among adults who gamble regularly, nearly 25% of Gen Z consider it an investment, the financial technology company NerdWallet found last year.
What’s with “crypto bros” and “stock dudes?”
A recent JPMorgan Chase investor demographics report found the monthly share of adults under 40 entering the stock market has more than tripled in the past decade, with young men comprising a significant portion of market newcomers.
Ville Rantala, who teaches finance at the University of Miami, said young people are increasingly postponing major life decisions and funneling their disposable income into investments instead of saving for the future. That’s particularly true of young men, who have fallen behind women in higher education and the labor market.
Rantala said those with unclear job prospects and retirement horizons may take more risks with their money.
There’s also a potential biological explanation. Rantala said testosterone and sensation-seeking behavior can catalyze patterns of excessive trading in young men.
Jayme Rudd, who avoids trading apps like Robinhood and Coinbase and volatile assets like cryptocurrency, said she understands why her male peers have adopted them.
Rudd, a 21-year-old UF information systems junior, thinks men take more financial risks than women because they associate aggressive investment posturing with masculinity.
“It’s really because they’re taught that they can and women aren’t,” she said.
Women, including Rudd, are generally more risk-averse than men. A 2023 Wells Fargo analysis found about 39% of women take an aggressive investment approach, while 55% of men do.
Glamorizing long-shot bets
Conner Rathbun, a 21-year-old UF finance junior, thinks some young investors who consume trading advice online suffer from the fear of missing out.
“They hear people are making crazy money off GameStop stock, and they just want to get in on the action,” he said, referring to a coordinated effort among investors to bump the video game retailer’s stock price in 2021.
The GameStop trading frenzy originated on the Reddit forum “WallStreetBets.” Reddit users mobilized to buy shares of Gamestop to inflate the price and then rushed to sell before the bubble burst. Robinhood facilitated much of that trading.
In the past few years, thousands of young men seeking camaraderie and investing advice have flocked to what Christian Johnston calls “fin,” or finance, groups on the platform X. The 21-year-old UF finance master’s student said that’s also where investors will encounter more rags-to-riches stories than lessons on coping with financial loss.
Johnston said people posting online trading content tend to amplify their glittery wins and diminish their losses, so investors should take trading tips from social media with a grain of salt.
Experts recommend young people invest in their financial education before committing to stocks or cryptocurrency.
Sofia Johan, a Florida Atlantic University finance associate professor, said trading on stock and crypto exchange platforms is a buyer-beware pursuit, meaning users should be mindful of the risks.
“A hammer is great for building houses; a hammer can also bash your head in,” Johan said. “It’s the same thing with these online platforms.”
Contact Natalie Kaufman at nkaufman@alligator.org. Follow her on X @Nat_Kauf.
Natalie Kaufman is a sophomore journalism student and the Alligator's Fall 2024 Metro General Assignment reporter. In her free time, she likes drinking copious amounts of caffeine and running.
